KOSDAQ-listed D&D Pharmatech is developing a candidate for a treatment for metabolic dysfunction-associated steatohepatitis (MASH). MASH, commonly called "fatty liver," occurs when excessive fat accumulates in the liver, causing inflammation and damage that can lead to hepatitis, cirrhosis, and liver cancer. It can occur due to metabolic dysfunction even without drinking alcohol.
According to the Korea Health Industry Development Institute (KHIDI), the global MASH patient population is estimated at 400 million. EvaluatePharma, a pharmaceutical market research firm, projected that the global MASH therapeutics market will grow from 260 billion won in 2024 to 13 trillion won in 2030.
Only two MASH treatments have been approved by the U.S. Food and Drug Administration (FDA), including resmetirom from Madrigal Pharmaceuticals. The latecomer race is that much more intense. The Korea Health Industry Development Institute (KHIDI) said in its report "MASH therapeutics development and global market analysis," "Because drug development is still in the early stages, the market is a blue ocean."
◇ U.S. phase 2 underway, details expected around May
D&D Pharmatech was founded in 2014 by Chief Executive Lee Seul-gi, a former associate professor at the Johns Hopkins School of Medicine. The company is currently developing DD01, a MASH drug candidate. The candidate acts on two receptors: glucagon-like peptide (GLP)-1 and glucagon (GCG).
GLP-1 is a hormone that promotes insulin secretion in the pancreas and is known to aid weight reduction. Glucagon activates energy metabolism in the liver and breaks down fatty acids. The candidate being developed by D&D Pharmatech is known to induce a reduction in adipose tissue in the body. It is an injection administered once a week.
D&D Pharmatech is conducting a phase 2 trial in the United States with MASH patients and others. It recently completed 48 weeks of dosing for patients. The company plans to announce key endpoints for the phase 2 trial as early as May. Previously, DD01 showed an average fatty liver reduction rate of 62.3% at the 12-week assessment.
◇ Aiming for overseas technology transfer
The company will take the MASH candidate through phase 2. It will not conduct phase 3 itself. Instead, it plans to pursue a license-out deal. A license-out means transferring rights to the candidate to other corporations and receiving milestones (technology fees by development stage) and royalties (a portion of sales revenue). D&D Pharmatech transferred technology for obesity drug candidates DD02S and DD03 to U.S. company Metsera in 2023–2024.
Developing a new drug typically requires a long period and can cost as much as hundreds of billions of won. There is no guarantee of 100% success through commercialization. In such cases, corporations can choose to transfer technology to overseas pharmaceutical companies as an alternative. A D&D Pharmatech official said, "If we were to conduct phase 3 locally on our own, the scale would be large and the expense significant, so we are pursuing a license-out."
The company is aiming to sign a license-out deal around May. A D&D Pharmatech official said, "It would be good to sign the deal before May, but the counterparty may want to see the results related to 48 weeks of the clinical trial that will be announced in May," adding, "If the deal is signed after the clinical results are announced, the value (of the candidate) will change, so the size of the upfront payment could differ."
D&D Pharmatech will attend the JPMorgan Healthcare Conference in the United States this month. The event is expected to provide opportunities to explore technology transfer with overseas pharmaceutical companies. Han Yong-hee, an analyst at Growth Research, said, "The company will hold meetings with global big pharma at the JPMorgan Healthcare Conference and proceed with discussions on the transfer of DD01."
◇ Losses widen as clinical trials proceed
The company's technology transfer is expected to affect its earnings. D&D Pharmatech recorded accumulated operating revenue of 3.3 billion won in the third quarter of last year, down 48% from a year earlier. Accumulated operating losses widened to 23.6 billion won. As it advances new drug research and development, it needs to secure contracts overseas to offset operating losses.
A D&D Pharmatech official said, "Sales increased in 2024 as we received a milestone for the obesity treatment transferred to Metsera," adding, "Relative sales declined last year due to the base effect." The official added, "As we moved into full-scale DD01 clinical trials last year, spending on research and development and clinical expense led to operating losses."
The company entered KOSDAQ after three attempts. In 2020, it sought a KOSDAQ listing but failed to pass the Korea Exchange (KRX) listing review. It also failed to list in 2021. After filing for a preliminary KOSDAQ listing review in 2023 and winning approval, it went public in May 2024.